Public efforts to ensure environmental sustainability must be complemented with private finance, according to SC chairman Awang Adek Hussin.
KUALA LUMPUR: Businesses have been urged to play their part in helping Malaysia meet its commitments on climate change.
Securities Commission (SC) chairman Awang Adek Hussin pointed out that public finance is not enough to meet the estimate US$100 billion (RM450 billion) needed over the next three decades to achieve the net zero target in carbon emission by 2050.
Given the scale required to fulfil sustainable development goals (SDG) and climate commitments, public efforts must be complemented with private capital, he said in his keynote address at the Global Green Finance Leadership Programme on scaling-up sustainable finance in Southeast Asia here today.
Awang Adek said that the SC, recognising early on the need to fill this financing gap and the enormous potential offered, had introduced various initiatives since 2014 to develop an ecosystem for sustainable and responsible investment (SRI) in Malaysia to enable the domestic capital market to be part of the solution.
“It goes without saying that the groundwork must be laid today. Clear standards and criteria on what they mean to be sustainable must be set to provide clarity to businesses,” he said.
He said the SC plans to introduce principles-based SRI taxonomy for the Malaysian capital market by the end of this year as guiding principles on economic activities that support environmental, social and sustainability objectives.
Awang Adek said another important area to be nurtured, particularly for emerging economies, is transition finance.
He said that to help companies raise funds to make the transition towards low-carbon activities and better sustainability efforts, the SC introduce a framework in June to facilitate the issuance of sukuk linked to SRI.
“This also complements the SRI sukuk segment in Malaysia – where proceeds are focused on green, social and sustainability objectives,” he said.
Awang Adek said that within the Asean region, the SC also plays a key role in developing sustainable finance as co-chair of the Sustainable Finance Work Group of the Asean Capital Markets Forum, a regional grouping of securities regulator involved in the development of the Asean taxonomy for sustainable finance.
“This will provide an overarching guide towards a more sustainable region,” he said.
He expressed hope that the introduction of the Asean sustainability-linked bond standards and sustainable and responsible fund standards in October would narrow the gap in realising sustainability ambitions.
“The pathway towards a better future for this planet we call home is clear. It starts with each of us as stakeholders to take action,” he added.
Awang Adek said all domestic and regional stakeholders must play a role in advancing the sustainability agenda.
“Our success is dependent on collective efforts to address multi-stakeholder challenges and growth impediments, and ensure an orderly transition,” he said.
“While it is undeniable that the journey towards low carbon and climate resilient economies will be costly for Southeast Asian countries, I believe it is a necessary burden for the greater good of future generations,” he added.
